Chapters
What is the Covid-19 Leave Support Scheme?
Recording the Leave Support Scheme in Smartly
Common employee scenarios
What is the Short-Term Absence payment?
Recording the Short-Term Absence payment in Smartly

COVID-19 guide

COVID-19 Leave Support Scheme and Short-Term Absence Payment

A complete guide to processing COVID-19 support payments in Smartly.

covid

COVID-19 payments to help pay workers and self employed people who are self-isolating.

There are two different COVID-19 payments available for employers and self employed people:

  • COVID-19 Leave Support Scheme
  • COVID-19 Short-Term Absence Payment

These payments are to help employers pay their employees, and to pay self-employed people, who can’t work while they’re self-isolating or because they need to stay at home while they’re waiting on a COVID-19 PCR test result.

There’s no revenue test for either payment.

Applications for the COVID-19 Leave Support Scheme and Short-Term Absence Payment must be made within 8 weeks of the employee’s (or self-employed person’s) self-isolation period ending.

To download a PDF copy of this guide, click here

This guide covers:

  • What is the Leave Support Scheme
  • Processing the Leave Support Scheme in Smartly
  • Common employee scenarios 
  • What is the Short-Term Absence Payment
  • Recording the Short-Term Absence Payment in Smartly

What is the COVID-19 Leave Support Scheme?

You can apply for the scheme if your employees have been asked to self-isolate and they cannot work from home.

You can also use the payment to pay employees who are either:

  • Sick with COVID-19 and are isolating for 7 days
  • A household contact of someone who has COVID-19
  • Needing to stay home and look after a dependent child who has COVID-19

There's some helpful information about leave and pay entitlements during COVID-19 here.

What are my obligations as an employer under this scheme?

  • You must discuss with your employee about how you can best support them at this time. For example, they may choose to use any sick or discretionary leave they have, instead of getting the Leave Support. If you can't pay the full amount of this leave to your employee, you can apply for the Leave Support to top it up.
  • You must not be able to financially support your employee due to the COVID-19 public health restrictions. For example, the cost of paying for your employee’s leave and paying for replacement staff is significant.

For the full list of employer obligations, please refer to the COVID-19 Leave Support Scheme Declaration here.

How much can an eligible employee be paid?

The Leave Support Scheme is paid as a 1-week lump sum at the rate of:

  • $600.00 (gross) to a person working 20 hours or more per week (full-time rate)
  • $359.00 (gross) to a person working less than 20 hours per week (part-time rate).

Employers and employees need to meet certain criteria to apply for the Leave Support Scheme.

This payment is available anytime, and is not restricted to a change in traffic light settings.

How should employees be paid?

If you are receiving the Leave Support payment, you must try your hardest to pay the employee named in your application at least 80% of their usual wages. If that isn’t possible, you need to pay at least the Leave Support payment rate (i.e. full-time or part-time rate). If your employee's usual wages are less than the Leave Support payment, you must pay them their usual wages. Any difference should be used for the wages of other affected staff.

When can I apply for the scheme?

The scheme is available anytime and is not restricted to certain Alert Levels. You can find out if you're eligible and apply for the Leave Support Scheme here.

What about other leave entitlements?

Your employee isn't required to have used any or all their paid leave entitlements before you apply for the Leave Support on their behalf. However, you can agree with your employee to use any form of paid leave entitlements to cover the period they cannot work.

How should I process this payment in Smartly?

You can use the COVID-19 components to record the COVID-19 Leave Support payment in Smartly. Follow the steps below to record and process this payment for your employee. 

Recording the Leave Support Scheme in Smartly

Preparing to pay your employee

  • Go to Employee details and click on the Employee payments screen. Make sure the correct employee has been selected,
  • Open the Special leave section. Make sure that the special leave type “COVID-19 Leave Hours” is ticked.
  • Now open the Allowances section and make sure that “COVID-19 Leave Payment” is enabled.
  • Save the Employee payments screen.

Note: Please do not process the COVID-19 Leave Support payment as a One Off Payment. This must be included in your employee's ordinary earnings. Please use the COVID-19 Leave Payment allowance instead.

Important: In the Pay details screen, we recommend entering an Admin Note so you can record that the COVID-19 Leave Support payment was used. 

Processing your payroll

1. Go to the Run a pay section and select the employee you're applying the payment to.

2. Click Add leave item.

3. Select Leave type “COVID-19 Leave Hours” and enter the date range the payment applies to. Don't forget to double-check the hours are correct. Once you're happy, click Ok.

Covid leave

4. Now go to the "COVID-19 Leave Payment" allowance, and click on the pencil icon. Enter Quantity 1 and the rate of their normal pay (or $359/$600), then click Ok. Then Save the pay and continue processing your payroll. 

Covid allowance

Common employee scenarios

There are many different scenarios that can apply when an employer is using the Leave Support Payment to pay an employee. We’ve outlined some common scenarios below that may apply to your employees and for each scenario, provided guidance on how you can enter the payment in Smartly.

Scenarios 1 to 5: Refer to an employer paying an employee 100% of their ordinary wages/salary

Scenarios 1-5 are based on an hourly rate of $25 per hour, or $1000 per week where the employee would normally work 8 hours a day, 40 hours per week.

Scenario 1:

The employee did not work at all this week. Their employer pays them the Leave Support payment and then tops up their pay to 100% using their normal wages/salary.

1. Click Add Leave Item.

2. Select Leave Type “COVID-19 Leave Hours”.

3. Enter the date range which is from the start to the end of the pay period.

4. Enter the leave duration at 40 hours (this should be automatically calculated).

5. Click Ok.

6. Edit the COVID-19 Leave Payment allowance.

7. Calculate 100% of their normal wages for the period. In this example their normal weekly income is $1000.00

8. Enter Quantity of 1 and Rate of $1000.00 against the COVID-19 Payment allowance.

9. Click Ok.

10. Set the Days Paid to the number of days they normally work, e.g. 5 days.

Scenario 2:

The employee did not work at all this week. Their employer pays them the Leave Support payment and then tops up their pay to 100% using their annual leave.

You may, by agreement, allow an employee to take another paid leave type to top up their pay, e.g. annual leave. If this is used, the employee would not be expected to work for the time they are on annual leave.

1. Deduct the subsidy amount from the employee’s normal earnings to determine how much Annual Leave needs to be taken. In this example, this would be $1000 – $600 = $400

2. This means that you need to pay $400 in Annual Leave to take the wages/salary up to $1000 (100% of normal pay)

  • Find annual leave weekly rate used (in this example it is $1000)
  • Determine the proportion of a week that equates to $400 (400/1000 = 0.40)
  • Determine the number of hours that need to be entered by multiplying the proportion by the number of hours in a week for the employee. (0.40 * 40 hours = 16 hours) NB: For companies that hold annual leave balances in hours, the way you calculate the number of hours to be entered for the leave duration is slightly different. Divide the top up amount by the annual leave rate in hours.

3. Click Add Leave Item.

4. Select “Annual Leave”.

5. Enter the date range which is from the start to the end of the pay period.

6. Enter the leave duration as calculated in step 2, in this example 16 hours, and the amount should calculate as $400.

7. Select Leave Type “COVID-19 Leave Hours”.

8. Enter the date range which is from the start to the end of the pay period.

9. Enter the leave duration as their normal weekly hours less any annual leave taken.

10. Click Ok.

11. Edit the COVID-19 Leave Payment allowance.

12. Enter Quantity of 1 and Rate of $600.00 against the COVID-19 Payment allowance..

Scenario 3:

The employee did not work at all this week. Their employer pays them the Leave Support payment and then tops up their pay to 100% using their normal wages/salary. The employee does not have standard hours.

If the employee does not work standard hours, then we need to work out what their typical week would be. This should be calculated based on their average hours worked in the past 52 weeks. You can use the average hours report in Smartly to find this information.

1. Determine the Average Hours per Week.

  •  In this example, the employee’s Average Hours per week was calculated to be 30.25 hours. We also determined their average days per week is 4 days.

2. Click Add Leave Item.

3. Select Leave Type “COVID-19 Leave Hours”.

4. Enter the date range which is from the start to the end of the pay period.

5. Enter the leave duration – 30.25 hours (this may not have been what the system calculated, because it would have applied the average hours per day to every day in the date range).

6. Click Ok.

7. Edit the COVID-19 Leave Payment allowance.

8. Calculate their average wages for the period. In this example their hourly rate is $30.00, so their average weekly income is $756.25 ($25.00x 30.25).

9. Enter Quantity of 1 and Rate of $756.25 against the COVID-19 Payment allowance.

10. Click Ok.

11. Set the Days Paid to their average days worked per pay period in the last 52 weeks, e.g. 4 days.

Scenario 4:

The employee did not work at all this week. Their employer is using the Leave Support payment to pay the employee’s normal income, which is less than the payment amount.

If an employee normally earns less than the subsidy, you can just pay them their ordinary wages/salary. Any leftover funds should be used to pay the wages of other employees. In this example, the employee works a 22 hours a week, 5-day week at a rate of $25.00 per hour. Their normal weekly income is $550.00. They work more than 20 hours per week, so the subsidy entitlement is $600.00.

1. Click Add Leave Item.

2. Select Leave Type “COVID-19 Leave Hours”.

3. Enter the date range which is from the start to the end of the pay period.

4. Enter the leave duration - 22 hours (this should be automatically calculated if they have standard hours).

5. Click Ok.

6. Edit the COVID-19 Leave Payment allowance.

7. Calculate 100% of their normal wages for the period. In this example, their normal weekly income is $550.00.

8. Enter Quantity of 1 and Rate of $550.00 against the COVID-19 Payment allowance.

9. Click Ok.

10. Set the Days Paid to the number of days they normally work, e.g. 5 days.

Scenario 5:

The employee can work from home and is still able to work their normal 8 hours per day, 5 days per week.

Their employer must pay them at their ordinary hourly rate for any hours worked. If the employee is working their full normal week, you do not need to record the payment using the COVID-19 Leave Hours and Leave Payment components.

1. Enter the ordinary hours the employee would have worked for the pay period in the “Hours” field of the Normal Pay section. E.g. 40 hours

2. Leave the “Rate” as it is.

3. Ensure the Days Paid are set to the number of days they normally work, e.g. 5 days.

4. Do not enter anything in the COVID-19 Leave Payment Allowance or enter any leave hours.

5. If you’d like to record that the employee was paid using the Leave Support payment, select the “Enter an Admin Note” option on the right hand side under “Actions”. Enter admin note: “Paid using COVID-19 Leave Support Scheme”

Scenarios 6 – 9: Paying an employee less than 100%, but more than the Leave Support Scheme amount (e.g. 80%)

These scenarios are based on an hourly rate of $25 per hour or $1000 per week where the employee would normally work 8 hours a day, 40 hours per week.

Scenario 6:

The employee did not work at all this week. Their employer pays them the Leave Support payment and then tops up their pay to 80% using their normal wages/salary.

1. Click Add Leave Item.

2. Select Leave Type “COVID-19 Leave Hours”.

3. Enter the date range which is from the start to the end of the pay period.

4. Enter the leave duration - 40 hours (this should be automatically calculated).

5. Click Ok.

6. Edit the COVID-19 Leave Payment allowance.

7. Calculate 80% of their normal wages for the period. For example, $1000 x 80% = $800.00.

8. Enter Quantity of 1 and Rate of $800.00 against the COVID-19 Payment allowance.

9. Click Ok.

10. Set the Days Paid to the number of days they normally work, e.g. 5 days.

Scenario 7:

The employee did not work at all this week. Their employer pays them the Leave Support payment, and then tops up their pay to 80% using their annual leave.

You may, by agreement, allow an employee to take another paid leave type to top up their pay, e.g. annual leave. If this is used, the employee would not be expected to work for the time they were on annual leave.

1. Calculate 80% of the employee’s normal salary/wages. For example, $1000 x 80% = $800.00.

2. Deduct the subsidy amount from the 80% of income, to determine how much Annual Leave needs to be taken. In this example, this would be $800 – $600 = $200.

3. This means you would need to pay $200 in Annual Leave to take the wages/salary up to $800 (80% of normal pay)

  • Find annual leave weekly rate used (in this example it is $1000)
  • Determine the proportion of a week that equates to $200 (200/1000 = 0.04)
  • Determine the number of hours that need to be entered by multiplying the proportion by the number of hours in a week for the employee (0.02 * 40 hours = 8 hours)
  • Note: For companies that hold annual leave balances in hours, the way you calculate the number of hours to be entered for the Leave Duration is slightly different. Divide the top-up amount by the annual leave rate in hours.

4. Click Add Leave Item.

5. Select “Annual Leave”.

6. Enter the date range which is from the start to the end of the pay period.

7. Enter the leave duration as calculated in step 3, in this example 8 hours, and the amount should calculate as $200.

8. Select Leave Type “COVID-19 Leave Hours”.

9. Enter the date range which is from the start to the end of the pay period.

10. Enter the leave duration as their normal weekly hours less any annual leave taken.

11. Click Ok.

12. Edit the COVID-19 Leave Payment allowance.

13. Enter Quantity of 1 and Rate of $600 against the COVID-19 Payment allowance.

14. Set the Days Paid to the number of days they normally work e.g. 5 days

Scenario 8:

The employee only worked for a total of 35 hours out of their normal 40 hour-week. They did not work on Thursday and Friday. Their employer can only pay them the Leave Support payment amount. But since the employee worked 35 hours @ $25 per hour, they are entitled to be paid at least $875 for the hours they worked.

1. Enter the number of hours the employee actually worked into the Normal Pay section. In this example, the employee worked 35 hours at $25 per hour. This totals to $875.00.

2. Click Add/Edit Leave Item

3. Select Leave Type “COVID-19 Leave Hours”

4. Enter the date range which is from when the leave started, to the end of the pay period.

5. Enter the leave duration as the total hours they would normally work in the week, less the hours they actually worked.

6. In this example, 40 hours – 35 hours = 5 hours, so enter a Duration of 5 hours.

7. Click Ok.

8. Because you have already paid the employee at least the Leave Support amount for the hours worked, there is no need to edit the COVID-19 Leave Payment allowance unless you want to top them up. In this example, the employer cannot afford to top them up.

9. Set the Days Paid to the number of days they normally work, e.g. 5 days.

Scenario 9:

The employee only worked from home this week for 35 hours out of their normal 40 hour-week. Their employer can only pay them the Leave Support Scheme amount. But since the employee worked 35 hours @ $25 per hour, they are entitled to be paid at least $875 for the hours they worked.

Please follow the instructions set out in Scenario 8.

Scenario 10: Paying an employee only the Leave Support payment amount

Scenario 10:

The employee did not work at all this week. Their employer can only pay them the Leave Support payment amount.

1. Click Add Leave Item.

2. Select Leave Type “COVID-19 Leave Hours”.

3. Enter the date range which is from the start to the end of the pay period.

4. Enter the leave duration for their normal weekly hours: 40 hours.

5. Click Ok.

6. Edit the COVID-19 Leave Payment allowance.

7. Enter Quantity of 1 and Rate of $600 against the COVID-19 Payment allowance.

8. Set the Days Paid to the number of days they normally work, e.g. 5 days.

Scenario 11: Paying an employee 8% Holiday Pay and the Leave Support Scheme

Where an employer can only afford to pass on the full amount of the Leave Support Scheme, an agreement can be made in good faith to use the payment to cover their 8% holiday pay. The employee would therefore receive the full subsidy amount inclusive of their 8% holiday pay.

For example:

The employee normally works 8 hours per day, 5 days per week at $30 per hour. The employee is on a fixed-term contract so is normally paid 8% holiday pay on top of their earnings.

To calculate how many hours the employee can work so that the employer pays them only the subsidy amount, we need to take the 8% holiday pay into account.

If we don’t take the 8% into account and divide the subsidy by their basic hourly rate, then once the 8% holiday pay is added, the employer may still be obligated to pay more than the subsidy amount in order to cover the 8% holiday pay.

e.g. $700 / $30 per hour = 23.33 hours. If the employee works 23.33 hours @ $30 per hour, they will still be owed $700 (23.33 hours x $30 = $700 without accounting for 8%). The employer must pay the employee at least this amount for their hours worked.

If we add the 8% to their hourly rate, this will give us the correct number of hours they can work.

-    $30 x 1.08 = $32.40 per hour including 8%.

-    $600 / $32.40 = 18.51 hours

Therefore, if the employee works 18.51 hours, they are owed $600, including the 8% holiday pay,which is covered by the leave support payment. 

Important: If the employee is working from home during their isolation period and the employer can only afford to pay them the Leave Support payment amount, the employer must ensure the employee only works the number of hours inclusive of their associated 8% holiday pay, that the leave support payment covers.

What is the Short-Term Absence payment?

Employers can apply for the Short-Term Absence Payment, which is for employers to pay their employees who are awaiting a COVID-19 test result while self-isolating at home.

To be eligible, your employee must:

  • need to miss at least one shift of work and;
  • be unable to work from home.

Eligible employers can receive $359.00 for each employee affected. Employers (including self employed) can apply for this payment once in any 30-day period.

Where your employee wouldn’t otherwise have an entitlement to be paid if they are not able to work (e.g. if a worker has used up their paid sick leave so would be on unpaid leave) you should try to pay your worker as if they had worked that day, or where this is not possible, you must pay at least the full amount of the Short-Term Absence Payment to the employee while they are waiting for the relevant test.

If you're unsure about how to approach your situation, we recommend getting in touch with Work and Income.

Recording the Short-Term Absence payment in Smartly

We recommend you keep a record of the pay run that uses the Short-Term Absence Payment in Smartly. We have COVID-19 components to help with this.

Special Leave Type: COVID-19 Leave Hours

This is an unpaid leave type to record any hours of absence for your employee during the subsidy period, so they can continue accruing annual leave on any hours that they would normally be expected to work.

Allowance: COVID-19 Leave Payment

This is a taxable allowance, that allows you to keep track of any subsidy payments made to employees while receiving the subsidy.

covid message

Common employee scenario

Your employee has been tested for COVID-19 and must self-isolate until they receive a negative test result. By self-isolating, they will miss at least one work shift and cannot work from home. They don't have any sick leave entitlement. You have determined you need to pay the full amount of the Short-Term Absence Payment. 

Preparing to pay your employee

  • Go to Employee details and click on the Employee payments screen. Make sure the correct employee has been selected
  • Open the Special leave section. Make sure that the special leave type “COVID-19 Leave Hours” is ticked
  • Now open the Allowances section and make sure that “COVID-19 Leave Payment” is enabled
  • Save the Employee payments screen

Note: Please do not process the Short-Term Absence Payment as a One off payment. This must be included in your employee's ordinary earnings. Please use the allowance called COVID-19 leave payment instead.

Important: In the Pay details screen, we recommend entering an Admin note so you can record that the Short-Term Absence Payment was used. 

Processing your payroll

1. Go to the Run a Pay section and select the employee you're applying the payment to.

2. Click Add leave item.

3. Select Leave type “COVID-19 leave hours” and enter the date range the payment applies to. Don't forget to double-check the hours are correct. Once you're happy, click Ok.

Covid leave

4. Now go to the "COVID-19 Leave Payment" allowance, and click on the pencil icon. Enter Quantity 1 and the rate of their normal pay (or $359), then click Ok. Then Save the pay and continue processing your payroll. 

Covid allowance